A recent analysis from the Institute for German Economy (IW) reveals a significant shift in trade patterns, with Chinese companies increasingly diverting exports from the United States towards the German market as a direct consequence of the ongoing trade war. The study, released Monday, highlights a concerning trend with potential ramifications for German industry.
Data indicates that U.S. imports from China plummeted by nearly 16% during the first half of 2025, while German imports from China rose by approximately 11% during the same period. This influx has been accompanied by a near four percent decrease in prices for these goods, suggesting Chinese suppliers are aggressively pursuing market share through price undercutting.
The redirection is particularly pronounced in product categories previously imported by the U.S. In 1,558 distinct commodity groups where U.S. imports from China have diminished, German imports from China saw a surge of at least ten percent in the second quarter of 2025 compared to the previous year. These groups collectively represent almost 52% of all German imports from China. Worryingly, substantial increases in imports from China are observed within key industrial sectors where Germany traditionally holds a trade surplus – with some experiencing growth exceeding 100% year-on-year.
Plug-in hybrid electric vehicles (PHEVs) exemplify this trend dramatically. German imports of PHEVs soared by over 130%, while U.S. import values declined by a staggering 99% in the first half of 2025. The same pattern is evident in the automotive component sector, with imports of components like manual gearboxes increasing by an astounding 182% in Germany, while experiencing a decline in the U.S. market. The chemical industry is also facing increased pressure, with polyamide imports rising by 100% in Germany against a near 11% drop in the U.S.
“As the U.S. increasingly isolates itself from China, Germany is becoming an increasingly important outlet for Chinese companies” stated Jürgen Matthes, an IW expert. He cautions that this influx puts undue strain on German key industries, particularly the automotive sector, already grappling with significant challenges. Matthes attributes China’s competitive advantage to substantial state support and a devalued currency, enabling unfair competitive distortions and extremely low pricing.
The analysis concludes with a stark warning: “Brussels must more forcefully and comprehensively implement countervailing duties to re-establish fair competitive conditions”. The growing reliance on Germany as a diversion market for Chinese goods raises fundamental questions about the sustainability of German industry and the need for a more robust European trade policy.
